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Strategy of New Chief at Motorola Appears Poised to Pay Off

LIBERTYVILLE, Ill. —Sanjay Jha’s honeymoon as co-chief executive at Motorola lasted just a few minutes into his first meeting with employees in 2008.

“Why should we trust you?” one employee blurted. The frustration was understandable. Motorola, which pioneered cellphones and built such consumer favorites as the StarTac and the Razr, had not had a hit phone in years, and a succession of leaders could not find one.

Mr. Jha, 46, an engineer who worked his way up at Qualcomm from a chip designer to the No. 3 executive, answered the challenge, saying employees should not take him on faith but watch what he did.

Mr. Jha recalled in a recent interview that he had hoped, at a minimum, that his talk “gave the team general comfort I wasn’t a huckster.”

He knew he had to act fast to slash costs and prune dozens of phones based on dead-end technology that simply were not profitable. That made the last several months of 2008 a financial disaster — losses doubled as sales fell by a third.

Mr. Jha also knew he had only a year to deliver new handsets that could go head to head with Apple’s iPhone if he had any hope of retaining the trust of Motorola’s employees, investors and customers — not to mention its board, which had lured him with an enormous grant of stock and options.

“If I didn’t have smartphones in the market for Christmas of ’09, this business wouldn’t have a runway,” he said.

Mr. Jha does not have Motorola flying again, but he at least has it poised for a takeoff. On Wednesday, Verizon Wireless introduced Motorola’s new Droid smartphone, which is nearly as thin as an iPhone but with a bigger screen and a slide-out keyboard. T-Mobile has started selling another Motorola smartphone called the Cliq.

“Motorola is a different place than it was a year ago,” said Paul E. Cole, T-Mobile’s vice president for product development. “Sanjay has done a spectacular job.”

Photo

Sanjay Jha, co-chief executive of Motorola, with the company's new smartphones, the Droid, left, and the Cliq.Credit
Hiroko Masuike for The New York Times

Looking back, Mr. Jha said that Motorola was in worse shape than he knew when he took the job, largely because of a dysfunctional management culture that missed the shift in consumer preferences from phones intended primarily for talking to those that do nearly everything a computer can do. The company’s engineering talent, which had once developed great phones, remained intact, he said.

As luck would have it, one of those engineers, Rick Osterloh, grabbed Mr. Jha just as he stepped off the stage at that first town meeting in August 2008. Mr. Jha had mentioned Google’s Android operating system for smartphones. Mr. Osterloh rushed the stage to tell him he was working on an Android phone in Motorola’s Silicon Valley outpost that would bring together text messages, e-mail and social-network updates.

By the end of that week, Mr. Osterloh was sitting on the corporate jet, flying with Mr. Jha back to California and explaining the Android concept in detail. A few days later, the top dozen members of Mr. Osterloh’s group assembled in a conference in Motorola’s office in Sunnyvale, Calif., to review the work done so far. The four-hour meeting was scheduled for 6 p.m., a shock for Motorola’s 9-to-5 culture. And Mr. Jha had not only asked for the PowerPoint of the presentation in advance, he had read all 100 slides and asked such detailed questions that the presenters had had to produce 20 more slides.

“He was able to understand what we were doing at such a detailed level. I was very impressed,” Mr. Osterloh said.

Mr. Jha was just as impressed with Mr. Osterloh’s unit. “Very quickly, I figured out they knew how to write software,” Mr. Jha said. “It felt like a team that would execute.”

In the weeks after, as Mr. Jha scrutinized Motorola’s other product groups, he often had the opposite reaction. At another meeting that ran late into the night, he discovered that the group making phones with Nokia’s Symbian operating system was staffed almost entirely by outside contractors. The entire project appeared to lack coordination and it was constantly months late in delivering phones. “They were fixing the same bug three or four times,” he said. “It was the contractors run amok.” Even worse, Motorola was not making money on its Symbian phones.

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Mr. Jha soon decided to axe the entire Symbian product line as well as phones using several other operating systems. He wanted to simplify product development to standardize on one or two core systems. It came down to a Microsoft Windows mobile operating system and Android. When Microsoft said that a crucial release of its mobile operating system would be delayed, Mr. Jha gave Microsoft the stiff arm and bet on Android.

At the same time, Mr. Jha had to pick which microprocessors and radio chips would be at the core of its new line. This forced him to choose between chips made by the division he had run at Qualcomm and a custom design Motorola had been developing with Texas Instruments.

“This was very hard for me,” Mr. Jha said. “I was very strongly associated with the Qualcomm chip.” He spurned his former employer.

Photo

Analysts said that the Droid, which will be backed by the biggest ad campaign by Verizon Wireless, is a crucial milestone in Motorola’s recovery. Mr. Jha with a Droid phone.Credit
Hiroko Masuike for The New York Times

In the fall of 2008, Mr. Jha received an e-mail from Verizon, asking for ideas for a “long ball play for the fourth quarter” of 2009, Mr. Jha recalls. That meant a smartphone that could take on the iPhone. He flew to the carrier’s headquarters in Basking Ridge, N.J., bringing with him models of several of the company’s latest designs. Verizon executives seemed partial to one thin, angular handset that had been designed in London. Even without a firm order, Mr. Jha immediately assigned Iqbal Arshad, who had been the project manager for the Verizon version of the Razr, to transform the mockup into a smartphone Verizon could sell a year later.

“Sanjay said ‘Burn the ships and focus on Android,’ ” Mr. Arshad recalled. That meant rearranging the existing, tightly packed interior to accommodate the larger chips needed to connect to Verizon’s network. Meanwhile the phone’s overall design needed to be exciting enough to go head-to-head with the iPhone.

They found a way to fit a slide-out keyboard into a phone that was only 1.5 millimeters thicker than the iPhone. And they used a 3.7-inch touch screen, noticeably bigger than the 3.5-inch screen on the iPhone. To take advantage of the higher resolution of that screen, Motorola, working with Google, developed new software that would support high-definition video and 3-D graphics.

Motorola’s Droid is the first phone to use the latest release of Android, called Éclair, which features free turn-by-turn directions from Google and sophisticated speech recognition.The biggest problem was the balance between design, which was once a Motorola hallmark, and the phone’s performance. “When you are trying to make something small and powerful, everything is a tradeoff,” Mr. Osterloh explained. “You have to iterate the design thousands of times to get it right.”

Even a small change, like the color of the paint, means that the design of the several radio antennas embedded into the phone’s case have to be rearranged.

Verizon worried that the angular design of what was to be the Droid appealed more to men than women. Motorola quickly rounded some of the phone’s edges and added a rubberized backing to create a softer feel.

By March, T-Mobile had placed a firm order for the social-networking phone that it would name the Cliq. But Verizon was still skeptical, remembering many times in the past when Motorola had missed important deadlines. So Mr. Jha hand-delivered a working prototype to Lowell C. McAdam, the chief executive of Verizon Wireless. A few weeks later, e-mail messages started arriving with purchase orders from Verizon for what it decided to call the Droid.

Mr. Jha was back on stage Wednesday morning, this time at a news conference to formally introduce the Droid, which will go on sale next week for $199.

Analysts in the audience said that the Droid, which will be backed by the biggest ad campaign by Verizon Wireless, is a crucial milestone in Motorola’s recovery.

“To be able to come out with a sexy flagship device that is getting so much promotion from Verizon and really shows off their hardware skills — it looks like their bet on Android is going to pay off,” said Avi Greengart, the research director for consumer devices at Current Analysis. “If they hadn’t delivered something like this, they’d be out of business.”

A version of this article appears in print on October 29, 2009, on Page B1 of the New York edition with the headline: Strategy of New Chief at Motorola Appears Poised to Pay Off. Order Reprints|Today's Paper|Subscribe